Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Wednesday, December 21, 2016

DeVry Education Group, Owner of American University of the Carrbbean and Ross University Schools of Medicine, Settles Allegations of Deceptive Marketing

In early 2016, we first discussed the deceptive marketing charges against DeVry University and DeVry Education Group here. The charges have now been settled. The lede of the AP story about the settlement (via ABC News) was:

DeVry University and its parent company are paying $100 million to settle a federal lawsuit alleging the school misled students through deceptive ads.

The allegations that led to the settlement were:

The lawsuit focused on two marquee ad claims that DeVry used for years but dropped in October in a settlement with the U.S. Education Department.

Since at least 2008, the chain had advertised that 90 percent of its graduates who actively sought employment landed jobs in their field within six months of graduation.

But federal investigators found that DeVry was counting students who found jobs outside the fields they studied, and who already had jobs before they enrolled.

Included in the statistic was a graduate who studied in the health care field but found work as a restaurant server and another who worked as a car salesman, according to the FTC lawsuit.

The commission also challenged a claim that DeVry graduates earn 15 percent more than alumni at other schools a year after graduation.

So these were relatively straightforward allegations of deceptivemarketing. The penalties included fines for the company as a whole.

Under the settlement, DeVry agreed to pay more than $49 million to the FTC, which says it will distribute the money to students 'harmed by DeVry's conduct.'

The chain also agreed to forgive more than $30 million in loans issued before September 2015, and $20 million in debt owed by former students.

Also,

Going forward, DeVry has promised not to misrepresent job and income prospects of potential students, and not to count jobs that students found more than six months before graduation.

That seems a bit strange, because

officials for Devry, which is based in Downers Grove, Illinois, denied all wrongdoing but said they are 'pleased this matter is reaching resolution.'

If there was no wrongdoing, why did they need to pledge no further wrongdoing? In fact, if there was no wrongdoing, why did company management agree to pay $100 million? It seems to me that if there was no good evidence supporting the charges, the company could have defended the suit for a lot less than that.

Of course, the managers knew that the settlement would be paid by other peoples' money. As is usually the case nowadays, it did not include any negative consequences for any company managers who might have enabled, authorized, directed or implemented any deceptive marketing.

The Implications

So once again we have an example of a legal settlement involving a large, US based health care related - at least in part - organization. The settlement involved allegations of unethical behavior that likely harmed students. Yet the amount of the settlement amounted to a slap on the wrist for a corporation with over $1.8 billion in revenue (2015-2016, per Yahoo). Furtheremore, the nature of the settlement demonstrated the continued impunity of managers of large health care organizations, none of whom in this case had to suffer any negative consequences, yet some must have enabled, authorized, directed or implemented the deceptive marketing.

This case also raises even more questions about the American (and to some extent Canadian) reliance on offshore, for-profit medical schools to train many of their physicians. As we have frequently discussed, (most recently here),...

Admission to US medical schools is increasingly difficult. So many who
seek medical careers may be tempted to apply to schools outside the US.
In the last 30 years, American entrepreneurs have opened offshore
medical schools, mostly in the Caribbean, that cater to US students.
They teach in English, and do not require immersion in an unfamiliar
culture, so may be more attractive than medical schools in other
countries whose mission is to educate physicians to practice in those
countries. In 2010, Eckhert documented that the number of offshore
medical schools,
"for-profit institutions whose purpose is to train U.S. and Canadian
students who intend to return home to practice," but not to train
physicians to practice in the countries in which these schools are
located, was rapidly growing.(1) By 2010, there were 33 such schools,
20 of which were new since 2000.

Such offshore medical schools exist in a grey area. The small countries
or colonies in which they are located usually do not seek to regulate
them, since the physicians they produce are going to practice elsewhere.
There is no requirement that these offshore medical schools be
accredited in the US. Such accreditation is currently not required for
individual graduates
of such schools to be admitted to US house-staff programs or
for US licensure. So perhaps it is not surprising that little is known
about these schools.

How they choose students, the qualifications or even names of their
faculty, their curriculum, how they supervise clinical training (which
is mostly done by affiliated North American hospitals), and what happens
to their graduates are obscure. Eckhert attempted to describe what is
known, but noted "variability exists in the availability of information
on faculty; where data exists, it is noted that most of the permanent
on-site basic science faculty are internationally trained, many have no
documented medical education experience in the United States, and it is
not uncommon for them to be OMS [offshore medical school] alumni."

Concerns about how offshore medical schools are run, and how well they educate their students can only be heightened by the settlement of the latest DeVry case.

The DeVry statement about the settlement included the assertion that "at no time has the academic quality of DeVry University education been questioned." This is a bit disingenuous. The case was brought by the Federal Trade Commission, which has no particular role overseeing educational quality, and was specifically about deceptive marketing.

One wonders, however, what sort of education might be provided by a large corporation whose corporate culture did not recoil from what appeared to be grossly deceptive marketing.

That statement also specifically only mentioned DeVry University, which is one of many for-profit "educational" organizations under the Devry umbrella (look here). It said nothing about how such a corporate culture might affect educational quality at the other subsidiaries.

It certainly did nothing to help answer questions that were previously raised about the two DeVry owned and operated for-profit medical schools. In 2013, we posted
about a Bloomberg investigative article about the two DeVry owned
medical schools, at the American University of the Caribbean and Ross
University. The article focused on multiple issues:
- high attrition rates of students compared to those in US based schools
- inability of many students to complete clinical training in the customary two years
- low rates of students matching to US residencies compared to US graduates
- high costs for students, presumably a cause of their high levels of debt

Keep in mind that some of these concerns were based on statistics
supplied by DeVry. Yet now there is a new reason to be doubtful about
their statistics, and any other information coming out of DeVry about its medical education offerings. Furthermore, while Eckhert wrote in 2010 that the
increasing presence of offshore
medical graduates in the US "obligates U.S. medicine to take a closer
look at these educational programs," no such scrutiny has occurred since
then.

So, we see another aspect of the US health care system in which money seems
to trump mission, facilitated by an unseemly alliance between wealthy
corporate executives and bad US government policy. We need to reexamine
our fascination for "market based" approaches to health care, when
almost nothing about any part of health care resembles, or could
resemble a free market. We need to make health care
more transparent, and shine more sunshine on the nooks and crannies,
like off-shore but US corporate owned medical schools. We need to
facilitate health care leadership and governance that puts patients' and
the public's health first, way ahead of the personal enrichment of the
participants.

This may be a pipe dream in 2016, since the US at least just voted in what seems to be the most market fundamentalist, plutocratic administration yet. As the AP article noted, "some for-profit colleges see President-elect Donald Trump as a champion of the private sector who could spur a rebound for the [for-profit education] industry. In the weeks after Trump's election, sharing in DeVry's parent company surged 30 percent."

Thus, as long as the US continues its light touch regulation if, or even further deregulates the outsourced
offshore system which now educates increasing numbers of US doctors(2),
Americans who want to become doctors ought to be very skeptical about
the futures they may face if they choose to go to such offshore
schools.

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